Clinton and Trump on 9 Issues Affecting Your Pocketbook

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the White HouseWe all may be weary of the politics of 2016. But the policies that Democrat Hillary Clinton and Republican Donald Trump say they’ll bring to the White House could have a dramatic impact on your wallet, your job, your health care and your retirement. Here’s where the two presumptive nominees stand on major economic and financial issues, with key differences in their approaches. We also threw in a few campaign quotes that help illustrate their views. Take a look:

Economic Growth and Jobs

Key differences: Trump wants to pull back from worldwide economic engagement in pursuit of tougher trade deals and creating more jobs at home. His approach is similar in many ways to the Brexit vote to pull the United Kingdom out of the European Union. Clinton emphasizes economic development that relies on trade. And she supports a 66% increase in the federal minimum wage by 2020 and more liberal immigration policies, both of which Trump opposes.

Key Clinton quote: “We need to raise pay, create good paying jobs, and build an economy that works for everyone–not just those at the top.”

Key Trump quote: “I’m the only one on this stage [during the GOP primary debates] who has hired people.”

Trump’s proposals are a radical departure from 100 years of Republican pro-business, free-market orthodoxy. He wants to force some American companies to bring their foreign manufacturing operations back to the U.S. from China, Mexico, Japan and Southeast Asia. To put Americans to work, he advocates a huge infrastructure rebuilding program at home (more on that later in the slide show), including building a wall along the Mexican border to stop illegal immigration. He says he’ll deport all 11 million undocumented immigrants living illegally in the U.S. and place new restrictions on H-1B visas, which allow skilled immigrants to work in the U.S. for up to six years. And he wants to declare China a currency manipulator and impose huge tariffs on Chinese and Mexican imports “if they don’t behave.” Such threats concern economists, who worry that they will provoke a trade war and increase the likelihood of a global recession.

Where Trump waves a stick, Clinton favors a carrot approach: She would create tax and economic incentives to entice multinationals to bring jobs back to the U.S. She supports creating a pathway to citizenship for undocumented immigrants living in the U.S., and supports the H-1B program. She would increase the federal minimum wage to $12 an hour from $7.25. She says trade has been a “net plus for our economy,” yet she opposes President Obama’s Trans-Pacific Trade Agreement. Economist Chris Farrell worries that neither candidate is embracing retraining and financial support for workers who have lost their jobs to international competition. “Yes, protectionism is wrong. But so is not sharing the bounty from freer trade with those on the losing side of trade liberalization,” Farrell says.

Taxes

Key differences: Clinton’s plan would increase taxes on the wealthiest Americans. Trump’s would provide tax cuts for everyone — from the lowest-income earners to the top 1%. Over the next 10 years, Clinton’s proposal would increase federal revenue by $1.1 trillion, while Trump’s would reduce revenue by $9.5 trillion, according to a nonpartisan Tax Policy Center analysis.

Key Clinton quote: “I want to make sure the wealthy pay their fair share, which they have not been doing.”

Key Trump quote: “If I increase [taxes] on the wealthy [from my current proposal], they’re still going to pay less than they pay now.”

Under Clinton’s plan, taxes would change slightly or not at all for the bottom 95% of taxpayers, while the top 1% would see sizable increases. This is because Clinton wants to implement a 4% surcharge tax on income over $5 million, plus the Buffett Rule, which would ensure that individuals who earn more than $1 million annually pay a minimum effective tax rate of 30%. Other focuses of Clinton’s tax plan include capping the value of all itemized deductions at 28%, increasing estate taxes, and placing higher taxes on multinational corporations.

Trump wants to shrink the number of federal tax brackets from seven to three — 10%, 20% and 25% — and raise standard deductions. Under his proposal, single filers earning less than $25,000 and joint filers earning less than $50,000 would pay no taxes.

The largest tax cuts, however, would go to the richest Americans. The top 0.1% of taxpayers would receive an average tax cut worth more than $1.3 million — about a 19% tax cut, says the Tax Policy Center. Middle-income households would see, on average, a $2,700 decrease in taxes, or 4.9% of after-tax income. Trump’s other goals include eliminating federal estate taxes and cutting the corporate tax rate to a flat 15% of taxable income. The Tax Policy Center estimates that Trump’s policies would reduce federal revenue by $9.5 trillion over the next decade and increase the national debt by almost 80% of GDP by 2036. Roberton Williams, Sol Price fellow at the Urban-Brookings Tax Policy Center, says an obvious solution to generate more revenue would be to reduce the amount of cuts. But, he adds, “it would change the nature of the proposal. His proposal is a big, big, big, big tax cut.”

Health Care

Key differences: Clinton supports the Affordable Care Act and wants to expand on Obamacare. Trump wants to repeal the ACA and has suggested letting private plans operate across state lines.

Key Clinton quote: “When Americans get sick, high costs shouldn’t prevent them from getting better. With deductibles rising so much faster than incomes, we must act to reduce the out-of-pocket costs families face.”

Key Trump quote: “We have a disaster called the big lie: ObamaCare […]You have to be hit by a tractor, literally, to use it, because the deductibles are so high, it’s virtually useless.”

Clinton’s health care platform builds on President Obama’s landmark law by seeking to lower out-of-pocket and prescription-drug costs. To make premiums more affordable, she backs a tax credit of up to $5,000 per family to cover costs exceeding 5% of household income. She also wants to cap Obamacare premiums to no more than 8.5% of household income. Clinton’s other health care proposals include expanding access regardless of immigration status, making enrollment easier, and supporting a “public option” that would create a government health insurance agency to compete with private companies.

Like most Republicans, Trump wants to repeal Obamacare. He also wants to allow individuals to shop for private medical coverage across state lines in an effort to encourage competition and drive down costs. Trump has called for letting consumers fully deduct health insurance premiums from their tax returns and expanding the use of tax-exempt health savings accounts. These HSAs could accumulate tax-free contributions and become part of individuals’ estates, so they could be passed on to heirs without tax penalty.

Social Security and Medicare

Key differences: Clinton would expand Social Security benefits for women who are widows and caregivers, and let individuals over age 50 or 55 buy into Medicare. Trump has pledged to preserve Social Security and Medicare throughout his campaign, but in recent weeks his advisers have hinted at entitlement cuts to keep both programs solvent in the future.

Key Clinton quote: “Rather than expand benefits for everyone, I do want to take care of low-income seniors who worked at low-wage jobs. I want to take care of women. […] I want to start by helping those people who are most at risk.”

Key Trump quote: “We have to make our country rich again so we can do that, so we can save Social Security. Because I’m not a cutter. I’ll probably be the only Republican that doesn’t want to cut Social Security.”

Social Security is at a critical point. By 2019, interest rates won’t be enough to close the funding gap, and without further reforms, payments will be cut by 21% in 2034. Clinton opposes privatization of Social Security. She would expand coverage to people who leave the workforce to care for children or sick family members. She also wants to increase benefits for widows who face steep benefit cuts when their spouses die. To pay for it all, Clinton would increase taxes on high earners, adding $11 trillion to the Social Security benefits account and keeping the program in the black for another 75 years.

Trump has repeatedly said that he won’t cut Social Security. His plan to fund benefits is to create new jobs that generate more payroll taxes. In May, however, Trump adviser Sam Clovis hinted at potential entitlement cuts, saying, “After the administration has been in place, then we will start to take a look at all of the programs, including entitlement programs like Social Security and Medicare. We’ll start taking a hard look at those to start seeing what we can do in a bipartisan way.” Trump’s position contrasts with that of many Republicans, who hope to decrease payouts over time by raising the retirement age or calculating cost-of-living adjustments in a less generous manner.

Clinton’s main Medicare proposal is a new program called “Medicare for More.” Under her plan individuals over 50 or 55 would be able to buy into Medicare, which could lead to a better distribution of costs. Medicare for More could cover an additional 13 million Americans, including seven million uninsured individuals. Clinton’s other Medicare proposals include driving down prescription-drug costs for seniors, and endorsing “bundled payments” that allow individuals to make one payment for care rather than pay multiple providers involved in treatment.

Trump has said he won’t cut Medicare, but this claim contrasts with more recent statements by Clovis.

Climate Change

Key differences: Couldn’t be starker. Clinton believes in the science of climate change. Trump rejects it. Clinton wants to invest in a clean energy infrastructure to diminish burning of fossil fuels. Trump wants to free up more exploration and development of fossil fuels, including coal.

Key Clinton quote: “If we were the clean energy superpower of the 21st century, we would create millions of new good jobs and businesses, and we would transition away from fossil fuels and help the climate at the same time.”

Key Trump quote: “I think our biggest form of climate change we should worry about is nuclear weapons. The biggest risk to the world, to me — I know President Obama thought it was climate change — to me the biggest risk is nuclear weapons.”

Clinton’s goal is to see 500 million solar panels installed in the U.S. by the end of her first term, generating enough renewable energy to power every home in the country and reducing oil consumption by one-third. She also wants to launch a $60 billion Clean Energy Challenge that would aid sustainable energy efforts in states, cities and rural communities. Economist Kenneth Gillingham at Yale University’s School of Forestry and Environmental Studies says that her goals are highly ambitious. They assume that each home system has 25 200-watt solar panels. There now are about 1 million households in the U.S. with solar panels, and according to the Office of Energy and Renewable Energy, installations have grown to an estimated 30 gigawatts — enough to power 5.7 million homes. “Given that there are 125 million households in the United States in 2015, having roughly 20 million with solar panels by 2021 doesn’t sound absolutely crazy,” Gillingham says, “but it would be an incredible market growth over what we have today.”

Trump scoffs at climate change. He would cut funding to the Environmental Protection Agency, stop sending tax dollars to United Nations global warming programs, and withdraw from the Paris Agreement (an international pledge to lower emissions). According to Gillingham, leaving the Paris Agreement could have a big impact. “The Paris Agreement is likely to lead to real reductions in greenhouse gas emissions around the world,” he says. “Many of these would happen regardless of what the United States does, but some likely will not, and any additional new efforts to address climate change would hit a brick wall.”

Trump has also set a goal of achieving complete American energy self-sufficiency if he is president. But Gillingham and other experts note that energy markets thrive on trade, not energy independence. Gillingham says, “The thought of the United States leaving these [import and export] markets altogether is absurd and would leave billions of dollars on the table, most likely hurting both U.S. consumers and domestic oil and gas producers.”

Infrastructure

Key differences: Both candidates say they want to invest in America’s crumbling roads, bridges, tunnels and transit systems. Clinton has a detailed $275 billion plan that includes expanding networks for free broadband access. Trump has only made suggestions regarding a “trillion-dollar rebuilding plan.”

Key Clinton quote: “I don’t have to tell you what a sorry state we’re in. Our roads and bridges are potholed and crumbling. Families endure blackouts because our electric grid fails in extreme weather. Beneath our cities, our pipeline infrastructure — our water, our sewer, you name it — is up to a century or more old. Our airports are a mess. Our ports need improvement. Our rail systems do as well.”

Key Trump quote: “In my opinion, we’ve spent $4 trillion trying to topple various people. If we could’ve spent that $4 trillion in the United States to fix our roads, our bridges, and all of the other problems — our airports and all of the other problems we’ve had — we would’ve been a lot better off.”

Clinton’s main focuses include maintaining and rebuilding roads, bridges, public transit and airports, as well as extending Wi-Fi access in public spaces across America. Her five-year, $275 billion plan earmarks $25 billion for a national infrastructure bank that would encourage further public and private investment. The ultimate goal: generating $500 billion in funding. To pay for her proposal, the Democratic candidate would clamp down on tax shelters for offshore corporate profits. According to a report by the American Society of Civil Engineers, America’s infrastructure deficit is $1.6 trillion, meaning that Clinton’s plan would fail to cover even half of the estimate of the funds necessary to fully repair the nation’s framework.

Trump has no specific proposal for repairing America’s infrastructure, but the “trillion-dollar rebuilding plan” he has mentioned comes closer to hitting the $1.6 trillion deficit mark reported by the ASCE. Citing a Senate Budget Committee estimate of job growth from infrastructure investment, Trump claims his plan would create 13 million jobs. Like Clinton, Trump wants to improve America’s roads, bridges, airports, rail systems and more. He believes his experience in the real estate industry would allow him to rebuild the country’s infrastructure “on time and under budget.” Trump has not explained how he would fund his main infrastructure proposal or one of his most widely cited campaign promises: building a wall between the U.S. and Mexico. Without factoring in the diplomatic challenges of erecting such a wall, Trump’s estimates of $4 to $12 billion in construction costs fall short of experts’ estimates of closer to $25 billion, plus $750 million a year for maintenance.

Student Debt

Key differences: Both Clinton and Trump acknowledge a need to reduce the rising levels of college loan debt on graduates, but their methods differ.

Key Clinton quote: “No family and no student should have to borrow to pay tuition at a public college or university. And everyone who has student debt should be able to finance it at lower rates.”

Key Trump quote: “That’s probably one of the only things the government shouldn’t make money off — I think it’s terrible that one of the only profit centers we have is student loans.”

Clinton supports more federal help for students at public colleges and universities, free community college, and better rates and repayment plans for those with student loans. By 2021, her New College Compact Plan would allow students from households earning up to $125,000 a year to qualify for free in-state public school tuition, as long as families make some contributions to college costs and students work 10 hours per week. It would also let all borrowers automatically delay payments on federal loans for three months, refinance loans at the same rates as new student borrowers, and use an income-based repayment plan that guarantees borrowers don’t pay more than 10% of their income. Clinton says she would fund these proposals by raising taxes on the wealthy and closing tax loopholes.

Trump hasn’t detailed a plan to address rising levels of college debt. (At a Wisconsin town hall meeting, he said, “We’re going to do something for the students. We’re going to have something with extensions and lower interest rates and a lot of good things.”) But he has been outspoken about his belief that the government should not profit from loans. Trump adviser Clovis has stated that Trump opposes Clinton’s plan for debt-free higher education because there is no way to pay for it. Instead, he wants to increase the role of private banks in offering loans.

Paying Down the Public Debt

Key differences: Trump has proposed cutting the $19 trillion U.S. debt by giving bondholders less than the face value of the money owed to them. Clinton doesn’t have a specific plan for paying down the national debt, although she would pay for new programs by raising taxes on the wealthy.

Key Clinton quote: “If you look at the evidence at the end of Bill Clinton’s two terms, we had the longest peacetime expansion in American history, with 22 million new jobs, a balanced budget and a surplus that would have paid off our national debt had they not been so rudely interrupted by the next administration.”

Key Trump quote: “I would borrow, knowing that if the economy crashed, you could make a deal.”

Both the Clinton and Trump budget plans would increase U.S. debt over a 10-year period, according to an analysis by the nonpartisan Committee for a Responsible Federal Budget. Clinton’s proposals would increase debt by $250 billion, while Trump’s would increase debt by $11.5 trillion. Although both candidates have acknowledged the seriousness of America’s current and future fiscal state, neither has suggested a feasible plan to address the issue.

Clinton doesn’t have an official platform regarding debt. She contends the U.S. wouldn’t be facing a debt crisis if her husband’s efforts had been continued by the administration of his successor, George W. Bush. She would offset increased spending in areas such as infrastructure, energy and higher education by raising taxes on the wealthy. However, in order to put the U.S. on a sustainable debt path after enacting her current proposals, the CRFB estimates that Clinton would need to cut total spending by 6% to 15%, increase all tax rates by 3.5% to 8.5%, accelerate annual real gross domestic product growth by 35% to 125%, or use a combination of the three strategies.

Trump’s campaign website doesn’t provide any details for paying off the national debt, but he has shared several ideas. One that created controversy during the GOP primaries involves paying bondholders less than the face value of the money owed to them. Economists have widely ridiculed the plan, saying it would likely backfire because 55% of the country’s debt is held by Americans, who hold bonds in their 401(k)s and pension plans. Paying these citizens less than their due would hurt retirement prospects, as well as the stable reputation of U.S. Treasury bonds. As the CRFB advises in its report, Trump’s more realistic options are cutting federal spending, increasing taxes and encouraging economic growth.

Defense Spending

Key differences: Neither candidate seems to want to cut current levels of defense spending, but Clinton is focused on reallocating priorities and resources, while Trump hopes to make other countries pay more for maintaining worldwide alliances.

Key Clinton quote: “I think we are overdue for a very thorough debate in our country about what we need, and how we are going to pay for it.”

Key Trump quote: “I’m going to build a military that’s going to be much stronger than it is right now. It’s going to be so strong, nobody’s going to mess with us. But you know what? We can do it for a lot less.”

The Democratic nominee has no official position on the defense budget, but she has called for a commission to investigate military spending. Given her more hawkish reputation relative to President Barack Obama, and goals such as maintaining a robust presence in the Middle East, building a cutting-edge military and defeating ISIS, experts believe that Clinton would likely maintain current defense spending levels. She would also use the defense budget to tackle related national security issues, including cybersecurity and fighting infectious diseases.

Trump hasn’t explicitly stated how much he would spend on defense, either, but he has laid out a goal of making the military so strong that “nobody’s going to mess with us.” He thinks the current budget could be used more efficiently. One of Trump’s ideas for curbing defense spending is making America’s allies pay for common defense. This would force countries such as Germany, Japan and South Korea to pay a higher price for U.S. military support.

(Source: TCA)